A short squeeze is a rapid price increase that forces short sellers to buy shares to cover their positions — accelerating the price rise. Triggers: positive news, large buyers, or coordinated retail buying (GameStop January 2021, AMC May 2021). Short interest above 20% of float makes a stock vulnerable to squeezes. Days-to-cover metric (short interest / average daily volume) indicates how long shorts need to fully exit. Famous squeezes have generated 500%+ moves in weeks. Risks for shorts: theoretically unlimited losses (stock can rise infinitely while loss is limited to short proceeds). Squeezes are momentum trades — extremely risky for both bulls and bears.
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Short Squeeze
August 22, 2026 · Aditya Gupta
Investing
Related terms
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A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
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